Swing States

As I watch the Michigan Primary results on Tuesday night, I will be focused on exit polls about the state of the economy in Michigan. Do voters in Michigan feel like the economy is on the rebound? Will voters in other key swing states be optimistic about the economic recovery by November?

Earlier this month Ryan Avent of the Economist posted a chart showing changes in unemployment rates in swing states. Although the chart seemed to show that labor markets are recovering faster in swing states, this may not be the case. In an earlier post I showed that much of Michigan’s drop in the unemployment rate is due to a declining labor force. Today Tami Luhby of CNN Money made a similar point – the unemployment rate in Michigan and other swing states is falling, in part, because of workers leaving the labor force.

Good news or bad news can cause the unemployment rate to fall. A better barometer of the labor market in swing states is the percentage change in payroll employment. The following chart lists swing states and their employment changes over the past four years.

The chart indicates that Nevada, Florida, Michigan and North Carolina have lost the most jobs (in percentage terms) since December of 2007. Moreover, ten of fourteen swing states have experienced a larger decline in employment than in the rest of the U.S.. Michigan, Florida and Ohio are the only swing states where employment grew faster in the past year than in non-swing states.

If one looks at the percentage change in employment, rather than changes in the unemployment rate, labor markets appear to be weaker in key swing states than in the rest of the U.S. The strength of the economic recovery, and employment growth, in these fourteen states may determine the outcome of the Presidential election.